Boston Properties (BXP)

Buildings in downtown Boston Massachusetts
ESB Pro/Shutterstock

First on the list is Boston Properties, the largest publicly traded developer, owner, and manager of Class A office properties in the U.S.

The company has a portfolio of 197 properties totalling 51.5 million square feet. BXP generates recurring rental revenue as its portfolio has a weighted average remaining lease term of 7.9 years.

Boston Properties has a strong focus on gateway regions with long-term rent growth prospects. Its top three markets by net operating income are Boston (34%), New York (28%), and San Francisco (21%).

The business has shown some solid improvement lately.

In the second quarter of 2021, the company’s funds from operations (FFO) — a critical measure of a REIT’s operating performance — totalled $268.6 million, or $1.72 per diluted share. That represented a sizable increase from the $236.9 million, or $1.52 per diluted share of FFO the REIT earned in the year-ago period.

Paying quarterly dividends of $0.98 per share, Boston Properties offers an annual dividend yield of 3.5%.

To be sure, Boston Properties trades at $113 per share. But you can get a piece of the REIT using a popular stock trading app that allows you to buy fractions of shares with as much money as you’re willing to spend.

Vornado Realty Trust (VNO)

Pedestrians walk past a building managed by Vornado Realty Trust in Manhattan on Friday, October 18, 2013.
Northfoto/Shutterstock

If you’re bullish on real estate in NYC, look no further than Vornado Realty Trust. This REIT’s portfolio is concentrated on premier office and high street retail properties in the Big Apple.

The company’s portfolio consists of 20.6 million square feet of Manhattan office space in 33 properties, 2.7 million square feet of Manhattan retail space in 65 properties, nearly 2,000 units in ten NYC residential properties, among others.

Vornado earned an adjusted FFO of $0.69 per share in the second quarter of 2021, up from the $0.56 per share it generated a year ago. The amount was also in excess of its quarterly dividend payment of $0.53 per share.

Vornado shares are trading quite a bit lower than their pre-pandemic level — down more than 30% over the past two years — and offer a very generous annual yield of 4.7%. If demand for real estate continues to surge in NYC, this REIT could be worth owning with some digital nickels and dimes.

SL Green Realty Corp (SLG)

In this photo illustration the SL Green Realty logo seen displayed on a smartphone
rafapress/Shutterstock

The neat thing about REITs is that they can specialize in very specific types of properties. Vornado — which we just looked at — owns office space, retail, and residential properties.

But what if you only want exposure to office buildings in NYC?

As it turns out, there is a REIT with that particular focus: SL Green Realty.

SL Green’s portfolio consists of interest in 77 buildings totalling 35.3 million square feet. In fact, it is the largest office landlord in Manhattan. The company has ownership interests in 27.1 million square feet of Manhattan buildings and 7.4 million square feet securing debt and preferred equity investments.

For investors looking for steady passive income, SL Green is particularly attractive. Most dividend stocks follow a quarterly distribution schedule. SL Green Realty, on the other hand, pays out dividends on a monthly basis.

Right now, SL Green has a monthly dividend of $0.3033 per share, which comes out to an annual yield of 4.9%.

A private property opportunity

You don’t need to be a real estate mogul to start investing in REITs.

If you are working with a smaller budget, you may want to use an investing app that allows you to buy “slices of shares” of large real estate companies — especially one that comes with no trading fees.

Of course, if publicly-traded REITs don’t provide the stability you’re looking for, there are more “private” ways to get involved.

For instance, some popular investing services make it possible to lock in a steady rental income stream by investing in premium real estate properties, from commercial developments in Los Angeles to residential apartments in Washington D.C.

You’ll gain exposure to high-end properties that are typically off-limits to retail investors, and you’ll receive regular payouts in the form of quarterly dividend distributions.

About the Author

Jing Pan

Jing Pan

Reporter

Jing is an investment reporter for MoneyWise. Prior to joining the team, he was a research analyst and editor at one of the leading financial publishing companies in North America. An avid advocate of investing for passive income, he wrote a monthly dividend stock newsletter for the better half of the past decade. Jing holds a Master’s Degree in Economics and an Honours Bachelor of Science Degree, both from the University of Toronto.

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